Accounting & bookkeeping for new UK businesses

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Not financial advice: this page is general information to help you understand your options. It is not financial, tax, legal or insurance advice, and we don’t offer or arrange credit or insurance. Check the linked official pages and speak to a qualified adviser about your situation.

Good bookkeeping is what turns a pile of receipts into a tax return you can trust. This page explains what records HMRC expects, what Making Tax Digital means for you and when it starts, and how the main accounting software options compare.

What records you must keep

Sole traders must keep records of all business sales and income, all business expenses, VAT records if registered, PAYE records if you employ people, and records of money you take out for your own use. You must keep them for at least 5 years after the 31 January submission deadline for the tax year. Source: GOV.UK: Business records if you're self-employed.

Limited companies have their own record-keeping duties, covering company records such as directors and shareholders, as well as accounting records. Source: GOV.UK: Company and accounting records.

For deadlines (Self Assessment, Corporation Tax, the confirmation statement and annual accounts), see our HMRC and Companies House deadlines guide.

Making Tax Digital for Income Tax, explained

Making Tax Digital (MTD) changes how sole traders and landlords keep records and report to HMRC. Instead of one tax return a year, people in MTD keep digital records in compatible software and send quarterly updates to HMRC, then finalise the year. Whether and when it applies depends on your "qualifying income" (broadly, your total income from self-employment and property, before expenses). According to GOV.UK, checked 29 October 2026:

• if your qualifying income was over £50,000 for the 2024 to 2025 tax year, you should have started using MTD for Income Tax from 6 April 2026;
• if it is over £30,000 for the 2025 to 2026 tax year, you'll need to use it from 6 April 2027;
• if it is over £20,000 for the 2026 to 2027 tax year, you'll need to use it from 6 April 2028.

Source: GOV.UK: Check if you're eligible for Making Tax Digital for Income Tax. Partnerships are expected to follow later, and some people are exempt, so read the full GOV.UK page for your situation.

What it means for a new business: if you are starting out as a sole trader, it makes sense to keep digital records from day one in software that is on HMRC's list. Then, when MTD applies to you, nothing needs to change. HMRC publishes the list in GOV.UK: Find software that's compatible with Making Tax Digital for Income Tax.

VAT and Making Tax Digital for VAT

You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days. You can also choose to register below that level. Source: GOV.UK: When to register for VAT. VAT-registered businesses keep digital VAT records and send VAT returns through compatible software: GOV.UK: Find software that's compatible with Making Tax Digital for VAT.

Accounting software compared

Prices below were checked 29 October 2026 on each provider's own pricing page and exclude VAT. Most providers offer introductory discounts for the first few months, so the regular price is the one to budget for.

These are plain links, not affiliate links. We have not been paid to include any provider. Spreadsheets can also be used for MTD alongside "bridging" software, but most new businesses find dedicated software simpler.

How to choose

1. Check MTD compatibility on HMRC's list for the taxes you'll need: GOV.UK: Find software that's compatible with Making Tax Digital for Income Tax.
2. Ask your accountant what they use. Using the same software makes year-end cheaper and quicker.
3. Check your bank connects so transactions flow in automatically.
4. Match the plan to what you'll actually do: number of invoices, bills, VAT, payroll, multi-currency.
5. Start the free trial with real data: import a month of bank transactions and send a test invoice.

A simple weekly routine

• Match each bank transaction to an invoice, receipt or category (10 to 15 minutes a week).
• Photograph receipts as soon as you get them.
• Chase unpaid invoices on the same day each week.
• Set aside money for tax in a separate pot every time you are paid.

Do you need an accountant?

Not legally, but many new businesses find a good accountant pays for themselves, especially limited companies with annual accounts and Corporation Tax to file. Ask for a fixed fee, check they are a member of a professional body, and agree exactly what they will do and what you will do.

Official sources

• GOV.UK: Business records if you're self-employed
• GOV.UK: Company and accounting records
• GOV.UK: Check if you're eligible for Making Tax Digital for Income Tax
• GOV.UK: Find software that's compatible with Making Tax Digital for Income Tax
• GOV.UK: When to register for VAT
• GOV.UK: Find software that's compatible with Making Tax Digital for VAT
• GOV.UK: Self Assessment deadlines

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Last checked 29 October 2026. Spotted something out of date? Let us know.